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Does that pension have a lump sum option?

You know that a Qualified Domestic Relations Order (QDRO) can be used to divide a pension after you and your spouse decide to call off your marriage. If your spouse is earning $5,000 per month, for example, you may be able to get a portion of that sent directly to you after the split.

However, what if your spouse doesn't get monthly payments? What if he or she has a lump sum payment option?

This doesn't mean you can't claim a portion of that asset. You may still be entitled to it, just like any other financial assets your family controls. It's just important to understand that you're getting everything at once; there won't be any more payments. If that's all you've counted on for retirement, you must work hard to make it last -- either by limiting your budget, reinvesting the money or both.

There are benefits to the lump sum option. For one thing, if it's a smaller company, there's a chance the pension could fail. You and your ex are expecting your payments for the next 25 years, budgeting to live off of them, but then the company folds. They're bankrupt and they just liquidate assets and close their doors. There's no more money coming in, and there's nothing you can do.

If you opted for the lump sum, it doesn't matter. You still got your pension, provided that you took the time to remember this valuable asset during the divorce.

When working with a pension plan, a property division agreement and a QDRO, be sure you know all of the legal steps you should take. The more you know about your rights, the better you can prepare for your financial future.

Source: CNN, "Should I take my pension's lump sum offer?," Melanie Hicken, accessed Oct. 11, 2017

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